204 P. 622 | Or. | 1922
Lead Opinion
— This is an action upon six several promissory notes, the complaint being framed in six counts, one upon each note. Except for date and time of payment they are identical. For the purposes of this opinion it is sufficient to set forth a copy of the first note declared upon, as follows:
“69081 — 345.
“P. O. Marshfield. State — Oregon. 6/20 1917.
“For value received, we promise to pay to the order of The Brenard Manufacturing Company, seventy-two and 50/100 dollars ($72.50), at Iowa*641 City, Iowa, payable as below four months after date (amount $72.50).
“Warner Grocery Co.
“By J. E. Warner.
“44396 A Extended to May 20, 1918.”
The genesis of the- transactions here involved was the making of the contract evidenced by the following offer of the defendants, which was accepted by the plaintiffs at Iowa City, Iowa:
“P. O. Marshfield. State — Ore. 6-20 1917.
“Brenard Manufacturing Company,
“Iowa City, Iowa.
* ‘ Gentlemen:
“On your approval of this order deliver to me at your earliest convenience F. O. B. factory point or distributing point the goods and printed matter listed on reverse side, in payment for which I herewith hand you my six notes aggregating $435. which you agree to cancel and return to me if order is not approved by you.
“After preliminary work by circulars and correspondence has been done you agree to send your organizer to assist us in constructive campaign work. Organizer to remain for such time as you deem necessary during which time I am to furnish free the necessary conveyance to properly conduct the work.
“I hereby certify that my last twelve months’ business was not less than $80,000 and upon this figure my next twelve months’ business to be $96,000, and that if 2/3 per cent of my gross business does not amount tó four hundred thirty-five dollars ($435) for the next twelve months you will pay me the deficiency in cash, and immediately upon approval of this order send your bond for $435. to cover this agreement with me.
“To make the last above paragraph binding upon you I agree to furnish you within ten days approximately 150 names and addresses of persons outside of my town whom I believe will make good contestants, take the shipments promptly, carry out the*642 Trade Extension Campaign plan, promptly meet all obligations entered into under this agreement, keep the premiums well displayed in my store, issue Premium Deposit Checks to the amount of each purchase, and every thirty days of this contract to report to you my gross business, to cordially co-operate with you and promptly furnish you all information you request to aid the success of the campaign, but it is understood that an omission of any of the above 'conditions shall release you only from the last preceding paragraph.
“I am to have the privilege of submitting any question or business problem to your Advisory Board and their opinion and advice are to be furnished without additional cost.
“In consideration of your special methods and plans and your expense hereunder, this order cannot be countermanded.
“ (These notes to be detached by The Brenard Mfg. Co.)
“Signed — Warner Grocery Co., Purchaser.
“By J. E. Warner.
“P. O. Marshfield. County — Coos. State — Ore.
“Freight Station — Same. Express Office — Same.
“Salesman — J. B. Vallen.”
As stated, the plaintiffs declared upon the notes, and in their complaint set up this offer and acceptance as part of the transaction, averring performance on their part of all the terms of the contract. The answer denies all the averments of the complaint except as stated.
*643 “The insertion into a pleading of a clause pretending to admit a fact not pleaded by the opposite party, is not a proper way to plead, raises no issue, is not capable of being denied, and should not be tolerated.”
The answer undertakes to plead the contract according to its legal effect, saying that it is “in writing and in the possession of plaintiffs and that the defendants cannot allege in detail the full terms thereof and should therefore be excused from so doing.” It is averred that the merchandise mentioned was shipped to the defendants to be used as premiums to the patrons of defendants in carrying out an advertising scheme for the purpose of increasing defendants’ business, and that it was not the intent of the defendants to purchase the merchandise or that there should be a sale of the same to them. It is further stated in the answer that defendants offered to return the merchandise but that the plaintiffs refused to accept the same. The following averment appears in the answer:
“That upon the signing of said note it was then and there agreed between plaintiffs and defendants that the plaintiffs would carry into effect said advertising scheme under the terms of said contract for the purpose of increasing defendants’ business, as hereinbefore alleged; that the signing of said note was with such express understanding and agreement, and was the sole and only consideration for said note; that the signing of said note and the services to be performed by said plaintiffs as herein alleged were mutual covenants and dependent conditions; that the plaintiffs have wholly failed, neglected and refused to perform the terms of said contract on their part to be kept and performed, all without reason or excuse known to defendants; that the defendants have at all times been able, willing and ready to perform the terms of said contract on their part to be kept and performed.”
The reply traversés the allegations of the answer except as therein stated or admitted, and the admission consists of an avowal of the execution of the contract in writing and an averment that the plaintiffs had shipped the merchandise mentioned in the contract: On motion of the defendants, at the close of the testimony for the plaintiffs, the court entered a judgment of nonsuit against the plaintiffs, and this is likewise assigned as error.
“Where covenants, although mutual, are independent, either party may recover damages from the other for an injury which he may have sustained by reason of nonperformance, although he has failed to comply with the stipulations on his part. But where the covenants are dependent upon each other, the rule is otherwise. The question whether covenants are dependent or independent does not arise where the breach of one covenant is offered as a setoff against the breach of another, but only where the nonperformance of one covenant is pleaded as a direct and peremptory bar to an action upon another.” 15 C. J. 1221.
“As a rule, however, where a covenant goes only to part of the consideration on both sides, and a breach of such covenant may be compensated in damages, it is an independent covenant, and an action may be maintained for a breach of the covenant on the part of the defendant, without averring performance or an offer to perform.” 7 R. C. L. 1091.
An analogous precept is thus stated in 13 C. J. 563:
“A test of severability which has frequently been applied, is to the effect that if the consideration is single, the contract is entire; but if the consideration is either expressly or by necessary implication apportioned, the contract will be regarded as severable, although this test will not necessarily prevail over other provisions of the contract showing a contrary intent of the parties. So where the portion of the contract to be performed by one party consists of several and distinct items and the price to be paid is apportioned to each item according to the value thereof and not as one unit in the whole or a part of a round sum, the contract will ordinarily be regarded as severable; and this rule applies although the contract may in a sense be entire if what is to be paid is clearly and distinctly apportioned to the different items as such and not to them as parts of one whole.”
“As to whether this contract is entire or severable is a question of construction which depends upon the intention of the parties, to be ascertained from the language employed and the subject matter of the contract. If the part to be performed by ope party consists of several distinct and separate items and the price to be paid by the other is apportioned to each item to be performed or is left to be implied by law, such a contract will generally be held to be severable. And the same rule holds when the price to be paid is clearly and distinctly apportioned to different parts of what is to be performed.”
This case has been consistently followed ever since it was decided.
In Daly v. City of Carthage, 143 Mo. App. 564 (128 S. W. 265), in considering the distinction between dependent and independent covenants, the court said:
“The authorities all agree that in determining whether covenants in a contract are dependent or independent the intention of the parties must govern. * * This intention must be gathered from the contract according to the ordinary rules of construction, and one of the infallible tests is whether or not a breach can be compensated for in damages. If it can be, then the covenants are held to be independent and a party must pay for what he receives under the contract, but may recoup the damages he has suffered by a breach upon the part of the other party.”
See also Sayre v. Craig, 4 Ark 10 (37 Am. Dec. 757); Riddle v. Coryell, 18 N. J. L. 377 (38 Am. Dec. 521, and note); Big Run Coal Co. v. Employers Indemnity Co., 163 Ky. 596 (174 S. W. 25); Couch v. Ingersoll, 2 Pick (Mass.) 292. In Hopkins v. Young, 11 Mass. 302, it is held that the decision of the question whether the covenants are dependent or inde
“So where there are reciprocal covenants in the same deed, depending on the same rule of damages, one covenant may be pleaded in bar to another to avoid circuity of action. But where the covenants are distinct and independent, they cannot be so pleaded; for the damages may not be commensurate, and each party must recover against the other separate damages, according to the justice of the case.”
Still further, by the test of the measure of damages not going to the whole consideration, the covenants are independent. As stated, the notes were to be paid without qualification. The other covenant was that if two thirds per cent of the gross business did not amount to $435 for the twelve-month, the plaintiffs were to pay the deficiency in cash. That could not be ascertained until after the expiration of the year. And moreover, the damages to be claimed under that clause were measured by the parties and went only to the increase of the business and not to the purchase price of the goods; hence the damage did not go to the whole consideration, but only to part, as stated.
“To' make the last above paragraph binding upon you, I agree * * , but it is understood that an omission of any of the above conditions shall release you only from the preceding paragraph.”
This language plainly groups those two paragraphs together as a feature separate and distinct from other conditions of the agreement. The defendants do not aver that they had performed those covenants, or had even tendered performance of them, but, as stated in the excerpt from their answer, they only say “that the defendants have at all times been able, willing and ready to perform all of the terms of the contract on their part to be kept and performed.” This is not a sufficient allegation of performance.
Tbe plaintiffs have an independent cause of action on tbe notes admitted to have been given in payment for tbe merchandise delivered, which was immune to tbe judgment of nonsuit. On tbe other band, it is possible tbat tbe defendants can allege tbe contract,
After admitting' “that at all times in said amended complaint mentioned, plaintiffs were doing business as Brenard Manufacturing Company at Iowa City in the state of Iowa,” the defendants seek to defeat the present action by the following averments in their answer:
“That at all times herein mentioned the plaintiffs were engaged in the advertising business, with the alleged and pretended purpose of increasing the business of their respective patrons and of these defendants, and that, on the twentieth day of June, 1917, at Marshfield, Coos County, Oregon, through their duly authorized agent, entered into the contract, of which said alleged note was a -part, to increase the business of the defendants to $96,000 within a period of twelve months from the date of said contract; that as a means or avenue for the bringing about of said increase to defendants’ business said plaintiffs were to ship to said defendants certain merchandise enumerated and agreed upon to be used as premiums to the patrons of the defendants for the carrying of said advertising scheme for the purpose of increasing defendants’ business as hereinbefore alleged; that it was never at any time or place the intent or purpose of the plaintiffs or the defendants or any of them that the defendants were to purchase said merchandise or that there was a sale of the same to the defendants, but that the sole and only purpose of said merchandise was for the carrying out of said general plan of advertising and the increase of defendants’ business, as herein alleged.
*653 “That said contract was in writing and is in the possession of the plaintiffs, and that the defendants cannot allege in detail the full terms thereof, and should, therefore, be excused from so doing. * *
“That said contract so made by said agent of said plaintiffs was approved and accepted by said plaintiffs.
“That upon the signing of said note it was then and there agreed between plaintiffs and defendants that the plaintiffs would carry into effect said advertising scheme under the terms of said contract for the purpose of increasing defendants’ business, as hereinbefore alleged; that the signing of said note was with such express understanding and agreement, and was the sole and only consideration for said note; that the signing of said note and the services to be performed by said plaintiffs as herein alleged were mutual covenants and dependent conditions; that the plaintiffs have wholly failed, neglected and refused to perform the terms of said contract on their part to be kept and performed, all without reason or excuse known to defendants; that the defendants have at all times been able, willing and ready to perform the terms of said contract on their part to be kept and performed. * *
“That said plaintiffs were at all times herein mentioned carrying on, conducting and transacting business, as alleged in defendants’ first defense to said amended answer, and the alleged-first cause of action, under an assumed name, and that at all times herein mentioned and at the present time said plaintiffs have wholly failed and neglected and omitted the execution, acknowledgment and filing of that certain certificate prescribed and provided for by Chapter 154, page 270, of the General Laws of Oregon for the year 1913.”
The requirements of such certificate are prescribed in Section 7777, Or. L., reading thus:
“No person or persons shall hereafter'carry on, conduct or transact business in this state under any*654 assumed name or under any designation, name or style, corporate or otherwise, other than the real and true name or names of the person or persons conducting such business or having an interest therein, unless such person or all of such persons conducting said business or having an interest therein, shall file a certificate in the office of the county clerk of the county or counties in which said business is to be conducted, which certificate shall set forth the designation, name or style under which said business is to be conducted, and the true and real name or names of the party or parties conducting or intending to conduct the same, or having an interest therein, together with the post-office address or addresses of said person or persons. Such certificate shall be executed and acknowledged by the party or parties conducting, or intending to conduct said business, or having an interest therein, before an officer authorized to take acknowledgment of deeds.”
In view of the plaintiffs’ earnest request in their brief, to determine whether the answer brings the case within the purview of the statute quoted, it is well to examine the pleadings of the defendants in that connection, in view of the testimony in the case upon which the motion for involuntary nonsuit was granted.
We will not stop to discuss whether or not the single transaction described in the answer constitutes “doing business within the state”: Commercial Bank v. Sherman, 28 Or. 573 (45 Pac. 658, 52 Am. St. Rep. 811). Neither do we enlarge upon whether or not solicitation within the state by an agent of a nonresident concern, of orders for goods to be shipped from a sister state to Oregon, constitutes “transaction of
Referring to the order, which is addressed to the plaintiffs at Iowa City, Iowa, the first paragraph is a request for the delivery to the defendants of an assortment of goods listed on the reverse side of the contract, in payment for which the notes were given. The articles listed include a phonograph, watches, jewelry, tableware, advertising and display cards,
In connection with the so-called “Correspondence Course,” an interesting case is International Textbook Co. v. Pigg, 217 U. S. 91 (18 Ann. Cas. 1103, 27 L. R. A. (N. S.) 493, 54 L. Ed. 678, 30 Sup. Ct. Rep. 481, see, also, Rose’s U. S. Notes). The plaintiff was an educational corporation having its home offices at Scranton, Pennsylvania. It employed solicitors both traveling and local in other states, not only to solicit subscriptions to its correspondence courses but also to collect the amounts due on such subscriptions. The applications for the courses of instruction were forwarded to and filled at the home office, and the necessary documents were mailed from that office to the pupils. For their own convenience some of the local solicitors maintained offices in different places in other states. Resistance to the payment of a balance due on a subscription was made in a Kansas court on the ground that the plaintiff was not entitled to maintain the action, because it had not complied with certain Kansas statutes. According to the syllabus in Ann. Cas.:
“A correspondence school which makes contracts with its customers in different states by correspondence and sends them books and information on the subjects of instruction is engaged in interstate commerce. A state statute which requires every foreign corporation doing business in the state to file a statement of its condition and obtain a certificate of leave to do business and which provides that no action shall be maintained in the state courts by any corporation doing business in the state without first obtaining such certificate, is unconstitutional as interfering with interstate commerce.”
In their effort to enforce the independent covenant for the payment of the notes given for the purchase price of the goods, the -plaintiffs ought not to be balked or penalized because possibly in the future they might do something within the ban of the local statute, but which they have not yet done. In Bruner v. Kansas Moline Plow Co., 168 Fed. 218 (93 C. C. A. 504), the company was an Illinois concern and had sold some plows to Bruner and delivered them to him at his warehouse in Kansas City, Missouri. In abatement of the action for the purchase price the purchaser made substantially the same defense which
“But there is no evidence in this record that the plaintiff ever did any other act in these territories than to make the sale and delivery of these goods and the attempt to collect their price, and the sale of goods in a state or territory by a foreign corporation by means of a solicitor, the delivery of the merchandise therein and the collection of the purchase price do not constitute doing or carrying on business within such a state or territory within the meaning of statutes prescribing conditions under which foreign corporations may do business therein”: Citing many cases; among others: Ammons v. Brunswick-Balke-Collender Co., 141 Fed. 570 [72 C. C. A. 614]; Cooper Mfg. Co. v. Ferguson, 113 U. S. 727 [28 L. Ed. 1137, 5 Sup. Ct. Rep. 739]; Fritts v. Palmer, 132 U. S. 282 [33 L. Ed. 317, 10 Sup. Ct. Rep. 93].
See also Wagner v. Meakin, 92 Fed. 76 (33 C. C. A. 577); Woodall v. People’s National Bank, 153 Ala. 596 (45 South. 194); Ichenhauser v. Landreme, 153 Ky. 316 (155 S. W. 738); Meddis v. Kenney, 176 Mo. 200 (75 S. W. 633, 98 Am. St. Rep. 496); St. Louis, A. & T. Co. v. Fire Assn., 55 Ark. 163 (18 S. W. 43); Charter Oak Life Ins. Co. v. Sawyer, 44 Wis. 387.
It is said that Dean v. Caldwell, 141 Ark. 38 (216 S. W. 31), is a case precisely like the present, in which it is held that the contract is intrastate in its nature, and not interstate. In that case the language of the contract was:
“On this warranty of sales, Partin Manufacturing Company hereby agrees to increase the purchaser’s sales and collections not' less than $15,000 in the next twelve months.”
There are two United States Supreme Court cases cited in the Dean-Caldwell case. One is that of Browning v. Waycross, 233 U. S. 16 (58 L. Ed. 828, 34 Sup. Ct. Rep. 578). • There, the contract to be performed included not only the shipment of lightning-rods into a state from another state, but also the furnishing of labor and materials necessary to set them up and attach them to houses in the latter state. Mr. Chief Justice White said this work was within the regulating power of the state, because (a) the affixing of lightning-rods to houses was the carrying on of a business of strictly local character; and (b) because such business was wholly separate from interstate commerce and involved no question of the delivery of property shipped in interstate commerce or of the right to complete an interstate commerce transaction, but concerned merely the doing of a local act after interstate commerce had completely terminated.
Another case is General Railway Signal Co. v. Virginia, 246 U. S. 500 (62 L. Ed. 854, 38 Sup. Ct. Rep. 360). There, with materials, supplies, equipment, machinery, appliances and devices brought from New York into Virginia, the plaintiff installed in the latter state a permanent railway signal system, attached to the soil, involving the digging of ditches, construction of concrete foundations, etc., and it was held that pro tanto this was the transaction of local business subject to the regulation of the State of Virginia.
In both of these cases a very substantial and original part, if not indeed the principal portion of the undertaking, consisted of local work wholly subsequent to the transportation characteristic of interstate commerce. It was as .if a contractor had imported from another state building materials with which he erected a building in the local community.
The case of Imperial Curtain Co. v. Jacob, 163 Mich. 72 (127 N. W. 772), is not in point here, for the agreement there was that the plaintiff should maintain in Michigan for three years an advertisement on a theater curtain in that state. The whole performance of the contract was to take place in the state in which the order was solicited.
A later case is York Mfg. Co. v. Colley, 247 U. S. 21 (62 L. Ed. 963, 38 Sup. Ct. Rep. 430, 11 A. L. R. 611). There the company, a Pennsylvania concern, had contracted to deliver to the defendant in Texas an ice plant guaranteed to produce three tons of ice per day. The plant consisted of various pumps, compressors,
“This work, it was stipulated, was to be done under the supervision of an engineer to be sent by the Tork Manufacturing Company, for whose services a fixed per diem charge of $6 was to be paid by the purchasers, and who should have the assistance of mechanics furnished by the purchasers, the supervision to include not only the erection but the submitting of the machinery to a practical test in operation before the obligation to finally receive it would arise. It was, moreover, undisputed that these provisions were carried out; that about three weeks were consumed in erecting the machinery and about a week in practically testing it, when, after a demonstration of its successful operation, it was accepted by the purchasers.”
The plaintiff’s effort to recover the amount due on the purchase price was resisted in the Texas court on the ground that the plaintiff was a foreign corporation and was not authorized to prosecute the suit, because it had not obtained a permit to transact business in Texas. The United States Supreme Court, speaking by Mr. Chief Justice White, discusses the cases cited in the Dean-Caldwell case and holds, according to the syllabus, that:
“A provision in a contract of sale of an artificial ice plant by which the foreign corporate seller agreed to furnish an engineer who should assemble and erect the machinery at the point of destination, and should make a practical efficiency test before complete delivery, is relevant and appropriate to the interstate sale of the machinery, and, therefore, does not justify the courts of the state to which the machinery was shipped in refusing to enforce payment of the purchase price, on the theory that the corporation was*663 doing local business in the state without having first secured the permit made by a state statute a condition precedent to the right to sue in the local courts.”
The Dean-Caldwell case is unlike the instant case, because there the plaintiff affirmatively agreed to increase the business of the defendants, while here the plaintiffs only guaranteed that the result of the efforts of the defendants themselves, with the goods and instructions furnished, would be to increase the business a certain percentage.
The plaintiffs accepted the order in Iowa, at their home office. Thus the contract was made in Iowa: 13 C. J. 580. It may be performed even as to the guaranty, without the presence of the plaintiffs in this state, either in person or by agent. The sending of the organizer cannot affect the present juncture, because it was only the appointment of an agent and nothing was done under the agency, owing to the defendants ’ refusal to allow anything to be done. The principal feature of the business on the part of the plaintiffs was to send their goods and their correspondence course, which they did in response to the order forwarded to them at their home office in Iowa. Like the ice machinery was guaranteed to manufacture three tons of ice per day, so here the plaintiffs guaranteed that if the defendants took the goods and followed out the instructions of_ the correspondence course, the result of the efforts of these same defendants would produce a gain in business. In the York Manufacturing Co.-Colley case, the plaintiff did not undertake to make the ice. So here, the plaintiffs do not undertake to increase the business. In the former case, the guaranty was that the defendants could make three tons of ice per day with the machinery sold to them. So here, the guaranty is merely that by the use
When measured by the admitted offer and acceptance, the answer of the defendants is largely sham and must be disregarded in all points where it undertakes to contradict or add to the written order which they themselves made. The motion for nonsuit was improperly allowed and the judgment should be re- . versed. Beversed.
Rehearing
Denied April 25, 1922.
On Petition eor Beheading.
(206 Pao. 208.)
Beheading Denied.
O. F. McKnight, for the petition.
William T. Stoll, contra.
Department 1.
— In an earnest argument in support of their petition for rehearing, counsel for defendant criticise the language of. the former opinion in it saying that the motion for nonsuit was improperly allowed. The basis of this contention is that it is
“Deny every allegation, statement, matter and-thing contained and alleged therein except as hereinafter specifically stated, admitted or qualified.”
If that which is thereinafter “specifically stated, admitted or qualified” shows that the answer does not constitute a defense, the plaintiffs must prevail, for it is manifest they have a sufficient complaint on the promissory note.
The defendants say in their answer that the parties entered a contract of which the alleged note was a part, clearly admitting the actual execution of the note. They also say that the plaintiffs were to ship-to said defendants certain merchandise enumerated and agreed upon. It is true they state further and finally “that the plaintiffs have wholly failed, neglected and refused to perform the terms of said contract on their part to be kept and performed.” At the same time and earlier in the same pleading they say that “prior to the commencement of said action these defendants offered to return said merchandise.”
Rehearing Denied.